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Pluses seen in Mexico oil, gas move

A change in the way Mexico handles its petroleum reserves could have implications for the development of Piceance Basin natural gas — and they might be beneficial, energy industry experts said.

The Mexican Congress voted to lift a 1930s-era ban on foreign investments in the nation’s energy industry, and Enrique Peña Nieto signed the bill that modifies three articles of Mexico’s constitution to allow foreign participation.

The new law won’t mean an instantaneous shift from areas such as northwest Colorado to Mexico, said John Harpole, president of Mercator Energy LLC in Denver.

That’s because technological advances such as hydraulic fracturing to free natural gas aren’t well known outside the United States.

“The know-how is a huge thing,” Harpole said. “They just don’t have the infrastructure down there to do what we do.”

That means it will be some time before Mexico is able to tap what is believed to be the fourth-largest supply of natural gas trapped in deep shales, according to the U.S. Energy Information Administration.

Demand for natural gas in Mexico is on the increase and the change in how the nation manages its resources won’t lessen the thirst for imported natural gas from the United States, Harpole said, noting that several pipelines to carry gas into the country are under construction.

The United States is the largest supplier of natural gas to Mexico and in 2012, the year for which most recent data is available, imports of U.S. natural gas rose 24 percent to 1.69 billion cubic feet per day, according to the EIA.

“Demand down there is great for the Piceance Basin and the southwest United States,” Harpole said.

The most likely immediate effect of the change in Mexican policy will be to free up offshore oil development, Harpole said.

Mexico is the world’s ninth-largest oil exporter.

The development of petroleum in Mexico “is a long-term benefit for everybody as North America continues to build out its vast energy infrastructure,” said David Ludlam, executive director of the West Slope Colorado Oil and Gas Association.

Even if the development of petroleum resources in Mexico might compete with those in the Piceance Basin, that’s a short-term challenge, Ludlam said.

Over the longer haul, energy security and the availability of feedstocks for manufacturing processes in North America will be of general benefit, Ludlam said.